The desirability of commodity taxation under non-linear income taxation and heterogeneous tastes *

  title={The desirability of commodity taxation under non-linear income taxation and heterogeneous tastes *},
  author={Emmanuel Saez},
This paper revisits the Atkinson–Stiglitz result on uselessness of commodity taxation in the presence of optimal non-linear income taxation in a more general setup, namely when tastes are heterogeneous. This general analysis displays the key economic assumptions under which the Atkinson–Stiglitz result is robust. A small tax on a given commodity is desirable if high income earners have a relatively higher taste for this commodity or if consumption of this commodity increases with leisure. An… CONTINUE READING
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